Report of the Consultative Meeting on the Rationalization of the Regional Economic Communities (RECs) for Eastern and Southern Africa

Transcription

1 African Union Commission Economic Commission for Africa Meeting of Experts on The Rationalization of the Regional Economic Communities (RECs) Lusaka, Zambia 9-10 March 2006 Report of the Consultative Meeting on the Rationalization of the Regional Economic Communities (RECs) for Eastern and Southern Africa

2 I. Introduction a) Opening Ceremony 1. The Consultative Meeting on the Rationalization of the Regional Economic Communities (RECs) for Eastern and Southern Africa Regions was held at Mulungushi International Conference Centre in Lusaka Zambia from 9-10 March The Meeting was officially opened by Honourable Rev. Lt. General Ronnie S. Shikapwasha, Minister of Foreign Affairs of the Republic of Zambia. The Minister welcomed all participants to Zambia and wished them a good stay in Lusaka. He noted that the question of rationalisation has been on the African Union (AU) agenda since He indicated that the African Leaders are doing their best to integrate Africa s socio-economic development but that these efforts were hampered by overlap of efforts by RECs. In this respect, the Minister invited all participants to discuss the issue with some degree of objectivity, realism and a sense of urgency given the need for Africa to be competitive in the globalising world economy. He then declared the Meeting officially opened. 3. The Meeting was also addressed by Dr. Maxwell M. Mkwezalamba, AU Commissioner for Economic Affairs who stressed the urgent need to accelerate regional integration in order to realise the objectives of the African Union. He stressed that the challenge of rationalization of RECs should be able to assist the continent in resolving some of the challenges the countries are facing in terms of resource dispersion and inability to consolidate the gains of regional integration. On his part, the Representative of the Economic Commission for Africa (ECA) underscored the critical importance of regional economic integration and the various challenges the RECs face in executing their mandates. He also highlighted efforts deployed by his Organisation in order to contribute to the rationalization process of the RECs in the continent. The texts of these statements are attached to the report for reference. 4. The Meeting was attended by Experts and Officials from the following Member States from East and South African Regions: Angola, Botswana, Djibouti, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Tanzania, South Africa, Sudan, Swaziland, Uganda, Zambia and Zimbabwe as well as Egypt from North Africa and DRC from Central Africa. The following RECs also attended the meeting: The Common Market for Eastern and Southern Africa (COMESA) the East African Community (EAC), Inter- Governmental Authority for Development (IGAD) and the Southern African Development Community (SADC). The Global Coalition for Africa (GCA), 2

3 the GTZ, Association of African Central Banks, African Economic Research Consortium and other regional and intergovernmental organizations. also attended the meeting. The List of Participants is attached to this report for reference. b) Election of the Bureau 5. After consultations, the following Member States were elected to form the Bureau for the Meeting: Chairperson: Zambia Vice Chairperson: Mozambique Rapporteur: Mauritius c) Adoption of the Agenda and Organization of Work 6. The meeting adopted its Agenda as follows: 1. Opening Ceremony Opening Statement by Dr. Maxwell M. Mkwezalamba, African Union Commissioner for Economic Affairs Introductory Remarks by the Representative of ECA Address by Honourable the Rev. Lt. General Ronnie S. Shikapwasha, Minister of Foreign Affairs of the Republic of Zambia 2. Election of the Bureau 3. Adoption of the Agenda and Organization of Work 4. Rationalization of the RECs: Proposed Measures 5. Overlapping Membership in COMESA, ECA, SACU and SADC 6. The case for Rationalization of the RECs 7. General Framework of Rationalization of the Regional Economic Communities 8. Scenarios for Rationalization of RECs 9. The Way Forward 10. Adoption of the Report 11. Closing Remarks 3

4 7. The Meeting agreed on the following working hours: Morning: Afternoon: From 09:00 hrs. to 13:00 hrs. From 14:30 hrs. to 18:00 hrs. II. Presentation by Global Coalition for Africa: Rationalization of Regional Integration, Institutions: Proposed Measures Summary 8. African countries have a longstanding aspiration to establish a continentwide political and economic union. As articulated in the Abuja Treaty establishing the African Economic Community and reaffirmed in the Constitutive Act of the African Union, the process involves the formation and strengthening of RECs. 9. A number of RECs and sub-recs have been organized in the various regions of Africa. However, it is now recognized that there are too many regional integration institutions, with the resultant overlap of membership and duplication of mandates. 10. The Global Coalition for Africa (GCA) has studied the issue of rationalization. Recently, the GCA deployed missions of eminent persons focusing on this problem to West Africa, and Eastern and Southern Africa. The GCA s analyses, including the work of the eminent persons, leads to the following conclusions: i. Key stakeholders, including the private sector, should be more closely consulted, involved and mobilized in support of regional integration; ii. iii. To achieve a unified and streamlined integration structure in each region, detailed and political-level organs as well as the secretariats of integration institutions should take systematic rationalization measures. Relatively more progress has been made in West Africa in this regard, but even there, more efforts need to be exerted; and The convening of regional summits and the establishment of political-level implementation mechanisms would ensure the early launch of credible rationalization programs in each region. 4

5 11. One of the Eminent Persons who visited Eastern and Southern African regions stressed the need to deal rationalization as a process and that meanwhile emphasis should be placed on harmonization as rationalization will take a long time. He also stressed the need for joint Heads of State and Government Summits at both regional and continental levels in order to look into the problem of overlapping membership of RECs. III. Presentation by GTZ: Overlapping Membership in COMESA, EAC, SACU and SADC Summary 12. In his presentation the representative of GTZ indicated that there is overlap of membership among Regional Economic Communities (RECs) in the Eastern and Southern African regions to an extent unparalleled anywhere else in the world. This has a bearing on the costs and benefits particularly of deeper integration. Moreover, membership in more than one Customs Union (CU) is technically impossible. As most RECs in the Eastern and Southern African regions wish to move to a Customs Union, member states with multiple membership at present will have to strike the balance of the costs and benefits of belonging to one or another CU. Solely concentrating on tariffs and revenue foregone would mean missing out on some of the more fundamental aspects of regional integration. 13. The presentation identified three options which are essentially between deeper and faster economic integration on the basis of the existing CUs acting as fast-track RECs on the one hand, and a larger but shallower integration project for the region as a whole on the other. While each of the options identified has its trade-offs it is shown that only fully functional CUs can act as relevant facilitators of trade expansion and can therefore be expected to impact most positively on investment and growth. Option 1 Status Quo plus larger integration project : SACU and EAC with their current members serve as fast-tracking groupings, while SADC and COMESA remain FTAs with a view to forming one larger, integrated Eastern and Southern African trade zone at a later stage. Option 2 Variable Geometry Option or SACU+ and EAC+ Option : Enlarged SACU and EAC become fully fledged CUs by 2010, and countries not participating in the CUs remain members of the SADC or COMESA FTAs for the time being but with a view to forming two separate CUs as SADC and COMESA in the medium term. Option 3 Leap Forward Option where COMESA and SADC move to CUs in the near future: COMESA and SADC become CUs by 2010/12 and merge with the current SACU and EAC 5

6 respectively. All countries take a decision regarding their membership in either the SADC or the COMESA CU. 14. The criteria that a Member State could use to determine where to strategically place itself are: Whether implementation has been taking place on the ground; Removal of supply side constraints; Similarity or convergence of interests with other Member States eg having a Common External Tariff; Mobilization of investment; and Effective elimination of Non-Tariff Barriers. 15. In view of the authors, Option 2 ( Variable Geometry Option ) is the most realistic and economically most feasible option for the region. The main risk of this option is that the envisaged deeper integration in SADC and COMESA will slow down substantially and be limited to integration efforts within the fast-tracking groups. To avoid this, all countries should decide as soon as possible on moving forward with the customs union agenda of either EAC+/COMESA or SACU+/SADC and withdraw from the other. 16. The ongoing negotiations of Economic Partnership Agreements (EPAs) with the EC should provide an important stimulus and support the process of deeper integration by promoting intra-regional trade and capacity building initiatives. The negotiations are, however, severely constrained by the fact that none of the groupings currently negotiating is a CU yet. IV. Presentation by UNECA: An overview of the case for rationalization Summary 17. The meaning of Regional Economic Communities (RECs) rationalization needs to be seen in the context of the ultimate objective of the Abuja Treaty establishing an African Economic Community (AEC). The Abuja Treaty breaks the continent into five regional communities: Northern Africa, Western Africa, Central Africa, Eastern Africa and Southern Africa. These RECs are meant to be building blocks of the future continental common market. 18. However, instead of five regional communities, there are at least fourteen economic communities within the geographical space of Africa. With the exception of the Economic Community of West African States (ECOWAS), none of them falls within the framework defined by the Abuja Treaty. Furthermore, within each of the five regional spaces, there exists many organizations with integration and/or economic bias. Thus in West Africa, 6

7 ECOWAS cohabits with West African Economic and Monetary Union (UEMOA), Mano River Union (MRU) and now CEN-SAD. In Central Africa, ECCAS covers the Central African Economic and Monetary Community (CEMAC) and Economic Community of Great Lakes Countries (CEPGL) spaces. In Southern Africa, Southern African Development Community (SADC), Southern African Customs Union (SACU) and Indian Ocean Commission (IOC) now share the essential part of their integration spaces among themselves and with the Common Market for Eastern and Southern Africa (COMESA) which, in turn, extends over the whole of Eastern Africa, some states of Northern Africa and Central Africa. 19. RECs rationalization therefore implies addressing the splintering of the regional spaces, overlapping institutions, efforts duplication, resources dispersion and quarrels over legitimacy arising from the existing multiple treaties of the RECs and Sub-Regional Economic Communities (SRECs). In effective terms, rationalization means addressing the considerable constraints impinging on the RECs ability to generate and channel a sustainable collective effort towards Africa s integration. 20. Two extreme definitions of the rationalization process are proposed: the strong and weak forms of rationalization as end points of a continuum along which different models of rationalization configuration could be perceived. The strong form of rationalization involves the absorption and mergers of the existing RECs and SRECs so as to synchronize them with the five regional communities proposed under the Abuja Treaty. This requires major political decisions including ceding of sovereignty at the highest levels. The weak form of rationalization is defined as the absorption and mergers of the programmes of the RECs. This weak form supposes that each of the cooperation and/or integration organizations maintain the entirety of its current mandates and objectives. Rationalization would then be undertaken through the standardization and harmonization of strategies, programmes, sectoral projects and cooperation instruments of the institutions operating in each region. V. Presentation by UNECA: General Framework of the Rationalization of the Regional Economic Communities Summary 21. The paper proposes scenarios that could be used by the African leadership to attain their goal of creating a continental African economic union. The scenarios are described below. a) Managing the Status Quo 22. Under this approach, nothing is done and the 14 regional economic communities continue to exist in their current forms. It is a scenario that is not recommended. The consequence of taking this approach is that it 7

8 would result in the breaking up of regional markets and amplify the formation of more regional economic groupings, with overlapping mandates and duplication of efforts. Adoption of this scenario entails policy coordination and that the deliberative organs and the AUC will have to provide guidance on the criteria, modalities, norms, instruments, and timeframes for the creation of the African Economic Community. b) Rationalization by mergers and absorptions 23. This scenario would have the rationalization process synchronized with the Abuja Treaty that partitioned Africa into five regional communities: North Africa, West Africa, Central Africa, East Africa and Southern Africa. This scenario requires the merging of the existing inter-governmental institutions in each region, their deliberative organs and their programmes and projects. Five RECs foreseen under this rationalization framework in Africa are: North Africa Economic Community (NAEC), West Africa Economic Community (WAEC), Central Africa Economic Community (CAEC), East Africa Economic Community (EAEC) and the Southern Africa Economic Community (SAEC). The implementation of this scenario would be difficult due to the complexities of the laws governing IGOs. It also requires the careful management of the redeployment of employees, and the liquidation of the assets/liabilities of the IGOs. The benefit of pursuing this scenario is that it would radically eliminate the multiplicity of integration institutions on the continent as well as hasten Africa s integration agenda. c) Rationalization around rooted communities 24. This scenario is based on the dual principle of one REC per region and only one REC per country. It calls for the creation of the regional communities according to common characteristics such as geography, ethnicity, language, sociology, historical bond and others. This approach would lead to the disappearance or re-definition of the objectives of the trans-regional communities. Moreover, geographical redeployment of all the institutions would have to be carried out, including the geo-institutional repositioning of several countries, and the replacement of the membership of several blocs with association agreements. This approach is also not very flexible and is complicated as existing treaties or conventions would have to be abrogated. It has legal, economic and operational ramifications and would be difficult to implement. d) Rationalization by division of labour 25. This rationalization framework recognizes and accepts the existence of different regional economic communities. It also divides cooperation efforts into regional and sub-regional programmes, categorizing them according to the interests of the countries in the same region. The scenario suggests that the Abuja Treaty defined RECs focus on regional programmes such as the free movement of people and goods; trade; 8

9 transit transport regulations; economic and trade data; monetary cooperation and payments; funding integration; and security and conflict prevention and management while the other inter-governmental organizations would focus on the programmes that are of concern to countries in their sub-regions such as agriculture; stock-farming and fisheries; industry; transport infrastructures (energy and environmental management); enhancement of human resources; and health, social and cultural affairs. Based on the manner in which tasks and responsibilities are apportioned, this scenario is very flexible and clarifies the extent of regional integration process, without committing countries to make major political or strategic choices. Its application does not require fundamental review of the treaties. What may be needed is an inter-institutional protocol that would define the allocation of tasks and the establishment of regional coordination structure that would serve as the interlocutor of the African Union. e) Rationalization through harmonization and coordination: 26. This framework maintains the existence of all the current RECs with their mandates and prerogatives intact. The rationalization process concerns itself with the harmonization and coordination of trade liberalization and macroeconomic convergence policies and criteria of the current regional economic blocs. In addition, the RECs would pursue common or joint programmes in energy and transport. Although this scenario seeks to harmonize all the policies, programmes and activities of the RECs, its implementation would require a lot of resources and time. The coordination and harmonization process calls for the review of all existing protocols, treaties and agreements and the drafting of new ones. VI. Presentation by the African Union Commission: Scenarios for the Rationalization of Regional Groupings for Economic Cooperation and Integration Summary 27. In Africa, economic integration came into being at independence as an expression of the willingness of the African leaders to reduce the pervasive effects of the repartitioning of the continent. Reasons, both political (the need for solidarity in the international fora) and economic (the small market of individual states) have compelled Governments to take initiatives in this field. This led to the creation of many political and economic intergovernmental institutions of cooperation and integration. 28. Africa now has eight (8) Regional Economic Communities whose main mission is to work towards the establishment the African Economic Community. 9

10 29. The tendency for the creation of several RECs has raised many questions as to whether this is the best approach towards the speeding-up of the integration process of the continent. 30. Some of these questions are: Is it possible to speed-up the process of integration of the continent in an environment where there are many RECs. Given that all of them have more or less the same objectives, is it possible for a country to belong to two or several RECs? Is the proliferation of these RECs compatible with their mandates? 31. The document presented by the AUC attempted to answer these concerns through the scenarios outlined below. a) First Scenario: Anchored Community 32. This scenario calls for harmonization in each region, as defined by the Abuja Treaty, on a common entity, which will be the focal point community. All the States of a given region will prepare and implement their policies in the fields of transport, communications, industry, agriculture, energy, education, science and technology, trade, money and finance; as well as in the fields of peacekeeping and security and defence. The other regional entities will then serve as technical or specialized institutions. In other words, these countries will be required to incorporate all their integration activities within one single community. This applies to activities related to the achievement of a single trade zone; customs union, common market, monetary unions and economic and monetary union. However, this scenario makes room for cooperation relations, which are outside the framework of the above-mentioned fields. b) Second Scenario: Infinitely Variable 33. This scenario consists of leaving the integration and sub-regional groupings as they are. It means that they will keep their own identities and operate independently, but they would be headed by the most efficient group in terms of programme and project execution. c) Third Scenario: The Status Quo 34. This scenario represents the present situation, which based on the political willingness of the AU Member States, embodies the fact that economic communities and groupings by virtue of Resolution CM/Res.464 (XXVI) of 1976 are considered as RECs and that economic and subregional entities, therefore, become their specialized organs or subsidiaries with which they will enter into cooperation relations or agreements. 10

11 d) Fourth Scenario: Sectoral Approach 35. This scenario suggests a sectoral approach where integration would be done in all development sectors and under the auspices of appropriate specific continental organs. It also recommends an immediate and direct sectoral integration, without going through intermediary steps. VII. General Discussion 36. The Meeting took note of the presentations made on the Rationalization of Regional Economic Communities and proposed that the discussions should take account of the substance (acceleration of the integration process) and the process issues. 37. A number of issues were raised during the discussion which ranged from the consultative process particularly the timeframe, role of international cooperating partners, acceleration of the integration process as well as capacity constraints. Specifically the main issues raised included the following: i) The presentations, while appreciated, did not capture recent developments including harmonization and coordination mechanisms among some RECs and did not reflect what the RECs are doing on the ground; ii) The rationalization process should take into account the specificities of each region, the mandate and the role of the RECs as well as motivation of Member States in joining regional groupings; iii). The Consultative Meeting took note of the case for rationalization and emphasized that regional integration is a continuous and lengthy process as reflected in the Abuja Treaty and thus should be undertaken cautiously. The gains that have been made by the RECs should not be overlooked. This notwithstanding, Member States may have to make critical decisions if the ultimate objective of an African Economic Community is to be met; iv). The Meeting stressed that the case for rationalization should have a clear analysis of what the mandates of the RECs are and whether they were moving towards their stated objectives. It also recognized the capacity constraints not only of the RECs but also of the Commission of the African Union and Member States to implement integration programmes; v). There was general agreement on harmonization and coordination of policies and programmes of the RECs as important strategies for 11

12 rationalization. To this end, the Meeting stressed the need to strengthen existing mechanisms and identify the areas of harmonization and convergence particularly trade, economic and monetary policies; vi). The Meeting underscored the need for a cost benefit analysis on harmonization and coordination to inform the rationalization process; vii). The Meeting observed that the mandate of RECs was not limited to economic activities but extended to other sectors such as peace and security as well as social issues. These dimensions should be taken into consideration in the discussion of rationalization of RECs: viii). The concept of rationalization should be viewed in the context of the African Economic Community as enshrined in the Abuja Treaty and the objectives of the African Union: ix). The Meeting indicated that there was need to ensure effective coordination between the AU and the RECs and welcomed the proposal for the Chairpersons of RECs to present progress reports on their institutions at the meeting of Ministers responsible for integration scheduled for end of March 2006; x). The Meeting emphasized the need for regional consultations to continue discussion on the rationalization after the Banjul AU Summit, scheduled in July 2006; xi). The involvement of stakeholders such as, private sector, civil society, parliamentarians and labour movements in the consultative process was underscored; and xii). The Meeting noted that while ongoing multilateral negotiations had a bearing on Africa, the process of rationalization should not be dictated by external players. IX. The Way Forward 38. The Meeting adopted the following: i) Consistent with the Abuja Treaty and the Constitutive Act of the AU, the AUC should, building on the existing studies such as the ECA/AUC study on Assessing regional integration in Africa, review and prepare an update on recent progress by RECs towards policy harmonization and coordination for continental 12

13 integration and propose, as appropriate, a continent-wide coordination mechanism for consideration by Member States and the RECs; ii) The AUC should have a continental oversight role over the harmonization and coordination of the programmes of the Regional Economic Communities. In this regard, the secretariat should propose how harmonization and coordination would be implemented; iii) The joint secretariat of the African Union Commission, the Economic Commission for Africa and the African Development Bank should be revitalized to support the integration process. The Joint Secretariat and the RECs should present to the AU Policy Organs programmes on harmonization and coordination; iv) The AUC in consultation with RECs, ECA and ADB should be tasked with setting up a time-table for the attainment of key landmark objectives in all sectors as provided in the Abuja Treaty; v) The rationalization process should be consultative and involve all key stakeholders of the integration agenda, including the private sector, civil society and women groups; and vi) Regional summits should be held to discuss the rationalization process with a view to accelerating the integration process. X. CLOSING CEREMONY 39. In closing the Meeting, the Hon. NG ANDU Magande, MP, Minister of Finance and National Planning of the Republic of Zambia stated that he was confident that the Meeting had exchanged views on how best to rationalize the activities and programmes of the existing RECs in the overall context of Africa s economic integration agenda. He further indicated that it was only a coordinated framework that African countries could maximise the benefits of integration. 40. The Minister concluded that there was still room to listen to reasoned arguments from all stakeholders and that it was through such a process that Africa would arrive at a scenario acceptable to all countries of Eastern and Southern African Regions. 41. In delivering the vote of thanks, H.E. M. George M. Liswaniso, Ambassador of the Republic of Namibia and Permanent Representative to the African Union, on behalf of the Meeting thanked the Government and 13

14 the People of Zambia for the warm hospitality accorded to all delegations and facilities placed at the disposal of the Meeting which facilitated a constructive debate and successful conclusion of the Meeting. He also expressed his gratitude to the COMESA Secretariat for the logistical support provided for the smooth running of the Meeting. 14